Nigeria Breweries Plc has reported an exchange rate loss of N70.6 billion for the second quarter of the year, which ended on June 30th, 2023. This significant loss was revealed in the company’s recently published interim report for the first half of the year.
Despite some positive key highlights for the company in Q2 2023, including a 13% year-on-year increase in net revenue amounting to N154 billion and a 21.5% YoY rise in gross profit to N68.4 billion, the exchange rate loss weighed heavily on its financials.
The operating profit showed remarkable growth, soaring by 119.7% YoY to reach N26.6 billion. However, the net finance cost surged by a staggering 970.8%, reaching N77 billion, leading to a pre-tax loss of N50.2 billion.
The unification of the exchange rate was cited as the main reason behind the substantial losses, as it resulted in forex losses upon the revaluation of Nigeria Breweries’ dollar-denominated loans. The company reported a net loss of N70.6 billion on foreign exchange, adding to a total year-to-date exchange rate loss of N85.2 billion.
These losses had a significant impact on the company’s financial position, leading to a substantial N47.7 billion reduction in net assets. Despite maintaining a healthy cash balance of N34.9 billion, the negative working capital suggests that Nigeria Breweries may need to find additional funds to repay its loans within a year or consider restructuring the loans.
The current losses are likely to have a further impact on the company’s full-year profits, especially considering that Nigeria Breweries had reported a profit after tax of N13.1 billion in the same period last year (2022).
It’s worth noting that Nigeria Breweries Plc has experienced back-to-back losses in the first two quarters of the year, reporting a loss before tax of N17.4 billion. As the company navigates the challenges posed by the exchange rate loss, its performance for the rest of the year will be closely watched by investors and stakeholders.
